P87 Form - Mileage Allowance Relief

I have a question about how to complete the P87 form to claim Mileage Allowance Relief

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This is a question on behalf of my husband. He has started a new job and has been given a fuel card, the company will pay for all mileage including personal mileage, so at the end of the tax year he will get a P11D. We believe he can claim Mileage Allowance Relief as he is driving his own vehicle. What we want to know is when completing the P87 form to claim does he need to add the amount from the P11D to the section 5.12 (Total Mileage allowance payment received from your employer).

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By Paul Crowley
02nd Apr 2024 16:56

5.12 would be zero, provided that the total cost of fuel has been entered on the p11d.

Some employers pay a flat rate mileage, below the maximum tax free limit. EG 20p per mile
That is where such reimbursements would be entered.

Recommend that hubby keeps a record of the cost of fuel charged to the card and checks that all of it has been declared on the P11d before sending in the claim.

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By FactChecker
02nd Apr 2024 18:47

Have to say that I'm confused ... if only because this is an unusual scenario.
Usually:
- ER provides a company car and reimburses the cost of fuel expended only on business mileage (or pays for it all upfront via a card - in which case they demand repayment of the portion expended on private mileage);
- or as previous item, but ER doesn't demand repayment for private mileage (thereby creating an extra BiK);
- or EE provides car and ER only pays the MAPS rate (MAR as per OP) for the business mileage ... which as Paul hints may either be FOT or may leave taxpayer with a partial reclaim, depending on rate paid by ER.

I've not previously encountered the combination of EE provides car but ER pays for all fuel including private mileage - so find it strange and frankly illogical.

Anyway ... the P87 form is headed "Tax relief for expenses of employment", so what is the logic for making a claim where the fuel has not been paid for by taxpayer (given that the 45p/20p is supposed to cover fuel as well as everything else, but of course only applies to business miles)?
[I hope that OP is applying the rules correctly - not just a mileage calc].

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Replying to FactChecker:
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By Paul Crowley
02nd Apr 2024 19:20

I had a client offer up a fuel card to the new employee. I told him it was a bad idea as the cost should really go through the PAYE scheme, no different to salary, with NI being deducted.
The employer is just paying employee's fuel bills, not a BIK in the normal way that BIKs are understood.

If OP's hubby has understood correctly, then I think the employer has got it wrong.
Employer's problem upon discovery, not the employee's.

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By meldchrty
02nd Apr 2024 19:13

As the fuel will be added to a p11D at the end of the tax year, as all fuel, personal and business, is being paid for by employer so makes it a taxable Benefit in Kind, so he will be taxed at his current tax level.

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Replying to meldchrty:
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By FactChecker
02nd Apr 2024 19:53

Sorry ... what? "so he will be taxed at his current tax level" ... on what - and how does this relate to your question?

Whatever the intention and whatever the payment route, the tax treatment will be different for business and non-business miles ... so those will need to be recorded separately.
Any payment for non-business (aka private) miles will in essence, as Paul has hinted, be treated as earnings ... whether as a BiK within a P11D (which won't be an option in 2 year's time), or more transparently direct within the PAYE payroll (which will become the mandatory route). None of which makes a lot of sense for ER, but *may* be nice for spouse if not on HR.

[Thought is this actually a OMB limited company - and someone's trying to be clever?]

The reason (or one of them) that I'm puzzled is that the P87 is only for use if the taxpayer's *total* allowable expenses are £2,500 or less for the year.
Obviously dependent on a range of assumptions, but when you factor that in with the rate decrease cap in MAR and the tax to be paid (maybe at HR) on the private fuel ... there are not many scenarios where things might make sense - unless the car isn't being used much at all (in which case why waste time on this)?

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By meldchrty
02nd Apr 2024 20:14

I don't understand why the company does it this way. They do not ask for mileage to be recorded in any form (Husband is recording business miles on a tracker app), they just advised he would get a P11D for BIK and he would be taxed at his 40% rate, but then to apply for the HMRC AMAP, which was why I asked my original question as we weren't sure if the P11D amount had to be included on the form.

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Replying to meldchrty:
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By Paul Crowley
03rd Apr 2024 12:49

Think of it another way. The employer has effectively increased his salary, and HMRC will refund 40% tax on his business miles claim.
He gets more money than if he just claimed tax free mileage allowance from the employer.

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By tltodman
03rd Apr 2024 09:53

I've seen this before. Employer is essentially providing an extra income via fuel card. Best to check with employer but I would expect all fuel will be be included on the P11D and the employee then needs to claims 45p per mile (or 25p once over 10k) via P87 on all business mileage. If employer is not requiring mileage records then they have no way of only putting private fuel on P11D. If this should be what they do, then employee just claims the difference between 45p and whatever the cost p/m of the fuel is (a nightmare to do accurately with fuel costs going up and down each week)

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Replying to tltodman:
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By Paul Crowley
03rd Apr 2024 12:54

Not sure that that is correct.
Also certain that the employer is getting it wrong in OP's case.
Employer needs to know the miles to be able to get the NI correct.
HMRC published something about this recently.

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